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Stain-Removal Hints for Martha's Brand

By Diane Brady Martha Stewart knows how to prepare a feast, but she can't be relishing the feeding frenzy now facing the company she founded, Martha Stewart Living Omnimedia (MSO). With Stewart facing prison for lying about a stock sale, competitors are lining up to dine on the remains of her company. The enterprise itself could survive, albeit in a more modest form. The key will be in nurturing the units that are less steeped in the personality of Martha Stewart, while playing down the strong associations in the rest of the company's product lines. For Stewart, that may mean a legacy that's distinctly more lowbrow than the one she originally carved out.

Unfortunately for MSO, its executives have done little so far to dispel the pessimism surrounding the future of the Martha Stewart brand. Other than issuing a statement that they were "deeply saddened" by Stewart's conviction and vowing to push on, they have been coy about the company's future. Still, the cancellation of Martha Stewart's syndicated TV show, and the imminent removal of "Ask Martha" from the title of her syndicated newspaper columns -- which will now be called "Living" and "Weddings" -- suggests a drive to distance the company from the well-coiffed convict/founder.

To Washington-based crisis-management consultant Eric Dezenhall, "it's a perfectly responsible experiment." After all, big-name advertisers are not going to flock to anything with the words Martha Stewart on it for some time to come, he points out. There are safer alternatives.

CLEANING HOUSE. Still, rebranding everything associated with Martha is likely to be less lucrative than focusing on Martha Stewart Everyday, the line of mass-market products sold through Kmart Corp. (KMRT). Everyday accounts for 5% of the retail chain's sales, and was an important factor in the 9.2% growth last year in MSO's merchandising revenues, to $53.4 million.

The product portion of MSO's sales jumped to 22% of overall revenues last year, up from 17% a year earlier, while publishing dropped to 55%, from 62%. Even amid the negative publicity about Martha, people kept buying those bed sheets.

There's also an Everyday Food magazine that has thrived with almost no sign of Martha in its pages. Even the colors -- bold reds, browns, and oranges -- are a departure from Stewart's signature pastel palette. While readership and ad revenues plummeted at the upscale Martha Stewart Living magazine in recent months, execs predict that Everyday Food will have monthly distribution of 750,000 copies by the summer.

PANACHE FACTOR. Stewart's Everyday franchise symbolizes the best that her brand has to offer -- solid how-to information and eye-pleasing products at the right price -- without the ego-stroking ubiquity of Martha. Stewart's guilty verdict isn't going to be top-of-mind to Kmart shoppers, argues J. Dana Clark, a management professor at North Carolina's Appalachian State University. Her name may even add "panache," Clark says.

What's more, Everyday isn't utterly dependent on the one-woman publicity machine that was Martha Stewart. Witness the giddy, Martha-free commercials for the brand currently being aired by Kmart.

The same can't be said of the other elements of her business, especially in broadcast and publishing. Stewart hosted the daily Martha Stewart Living TV show, which has now been pulled from CBS (VIA) stations across the country. She also hosted holiday specials, laughed it up with late night TV talk show host David Letterman, and shared her chore list in the magazine's monthly calendar.

PERSONALITY DEFECT. While a solid core of fans may remain and, in some cases, be even more loyal to Stewart because of her woes, advertisers aren't motivated by sympathy. Few will risk consumer wrath by putting money on the brand -- and without advertisers, segments of the business, such as TV shows with Martha's name on them, are gone. Even if the magazine is renamed, the loss of Stewart's personality makes it just another homemaking journal -- and a controversial one at that.

MSO executives would be wise to focus their energies on building up the brands that can outlast Martha Stewart. Everyday Food could spawn similar digests about gardening, home decorating, baby care, or any of the other areas on which Stewart built her niche. The content she has amassed over her career still has value. But the personality -- and the parts of her business most associated with it -- is now a liability that must go. Brady has covered the Martha Stewart trial for BusinessWeek and BusinessWeek Online

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